U.S. records strong jobs gains in October

JOBS BOOM: US Companies Add a Robust 227000 Jobs in October

US job growth seen accelerating; strong annual wage gain expected

And the leisure and hospitality sector bounced back from a flat September, adding 42,000 jobs last month.

"Wage growth is getting faster, but annual growth is probably closer to 2.9 percent than 3.1 percent due to abnormally low wages last October (likely weather related)", said Ben Zipperer, an economist at the left-leaning Economic Policy Institute, on Twitter. (People who don't have a job aren't counted as unemployed unless they're actively looking for work.) In October, the proportion of Americans with jobs reached its highest level in 10 years.

"The moderate improvement in wage growth keeps the Fed on track to hike again in December, and enables them to transition to a slower pace of rate increases next year", economist Mickey Levy of Berenberg Capital Markets said before the report was released.

For a USA economic expansion now in its 10th year, hiring remains robust, growth has picked up and the outlook is a mostly bright one on the eve of congressional elections.

Employment gains have averaged 218,000 jobs per month over the past three months, double the roughly 100,000 needed to keep up with growth in the working-age population. It's the first time since 2009 that wages have increased more than 3 per cent.

The labor market has been strong under President Trump, adding almost 4 million jobs since he took office, and consumer confidence reached almost a two-decade high in October.

The good news foreshadows more interest-rate increases from the Federal Reserve. September was the worst month for employment gains in a year. President Donald Trump cheered the robust jobs report, which came less than a week before the midterm elections that will decide who controls the U.S. Congress.

"The risk in 2019 is that the Fed will increase the pace of rate hikes", said Joe Brusuelas, chief economist at RSM in NY. Still, October's outsize gain might have reflected, in part, a rebound from September, when Hurricane Florence depressed job growth.

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The Fed is not expected to raise rates at its policy meeting next week, but economists believe October's strong labor market data could see the US central bank signal an increase in December. Construction expanded by 30,000 positions, almost half of which focus on residential homes. Retail payrolls rose by only 2,400, likely restrained by layoffs related to Steinhoff's Mattress Firm bankruptcy as well as some store closures by Sears Holdings Corp. Combined, the two quarters produced the strongest six-month stretch of growth in four years.

Despite the excitement over the 3.1 percent wage growth, some economists caution this is not a "magic number" and should be viewed with a grain of salt. In the early 2000s and late 1960s, wages for nonsupervisors, for which more years of data are available, were growing at a 4%-or-better annual pace. The average workweek rose to 34.5 hours from 34.4 hours in September.

Manufacturing output and hiring remain healthy, according to a survey by a private trade association, although increased tariffs have raised factory costs.

The labor participation rate also increased to 62.9 percent, up from 62.7 percent.

"We think it is too early to sound the alarm as wage growth is expected to hover around 3% in the next few months", the firm said in a research note.

Although pay increases can help boost spending and propel the economy's growth, they can also lead companies to raise prices to cover their higher labour costs.

Economists also noted that the pay increase remains well above the inflation rate.

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